Hitting 1,000 Subscribers

Plus, SpaceDotBiz's best-of-the-best interview answers

I'm so excited to share with you that SpaceDotBiz has hit a major milestone by passing 1,000 subscribers! To celebrate, I'm sharing some of SpaceDotBiz's most insightful interview answers so far and also asking for a favor to spread the word. But first, here's a recap of where the newsletter is currently at:

At the time of writing, SpaceDotBiz has 1,164 subscribers. It's taken about 18 months to get to this point. I sent out my first newsletter in March of 2021 and it has been a gradual process of building this community ever since. In total I've sent out 31 newsletters, consisting of 10 interviews and 21 original "essays". Now let's get down to business...

A Favor: Spread The Word

Please take a moment to forward this newsletter to one friend that you think would enjoy reading insights about startups in the space industry.

I don't pay for advertising or growth, so that means essentially all of my subscriber growth has resulted from you taking the time to share SpaceDotBiz with your friends. I'm greatly appreciative of you for not only signing up for these emails but also for believing that this content is valuable enough to recommend to those who trust you. I hope to continue to offer a level of quality with this newsletter that maintains that trust!

The Best-of-the-Best: Most Insightful Interview Responses from SpaceDotBiz's 18 Month History

I believe SpaceDotBiz is at its best when it's offering something you couldn't get from any other source. Some of you have been subscribing since I first started writing this newsletter in March 2021 and others have only signed up more recently. As a result, there's a lot of valuable wisdom about the space industry that may have never reached your inbox if it went out before you signed up. So I went back through all of my interviews and picked out the individual responses that I believe carry the most powerful and enduring insights to this day. If these passages inspire you to read the entire interview, just click the links I provide in each section. So here they are:

Interview: Phil Ingle, Managing Director in Morgan Stanley's Aerospace and Defense Investment Banking group. Phil's job is to assist the best space companies in financing their ambitious plans. He himself advised Rocket Lab through their very successful SPAC process in 2021.

Phil (second from left) speaking at the Satellite 2022 conference

Question: How would you counsel executives at post-SPAC companies that need to tap capital markets while their stock prices are depressed?

Answer: Markets are window-driven. Last year, 2021 was an absolute boom for equity markets in terms of issuance, IPO's, equities, etc. Then the first quarter of 2022 was a desert. I think there were two IPO's and two follow-on rounds. It doesn't matter how great you are right now, the capital markets are pretty closed for most high-growth companies.

So the advice is that you've got to execute on your business plan, but then you've got to be ready so that if the window does open, you can quickly tap it because these windows do open and close. The worst thing would be to do everything right operationally on the business front but not get yourself in a position where you're mentally prepared to tap markets. That preparation means having spent time talking about it with your board and saying "if the markets do open up, we're going to raise X amount of capital and we think the right strategy is equity because..." Being prepared is critical because if you're not prepared and the window opens and closes, that's not where you want to be.

Interview: Sunil Nagaraj, Founding Partner Ubiquity Ventures, formerly a Principal at Bessemer Venture Partners. At Ubiquity, Sunil invested in Loft Orbital and Muon Space and while he was at Bessemer, he led the fund's investments in Rocket Lab and Spire Global.

Ubiquity Ventures Founder Sunil Nagaraj. Source: TechCrunch

Question: What do you look for in potential early-stage space investments?

Answer: With early-stage investing, when I’m investing before there are many metrics, I usually ask myself three very specific questions. It might be natural simply to ask myself “Do I like this product?”, but I think that’s a terrible way to make investments. I’m not looking for companies that I would use as a customer, so it doesn’t make sense to ask, “would I ever use the product myself?”. I think it’s very tempting to do that, especially when you watch something like Shark Tank and they’ll say “oh I would never use that”.

The three questions I ask myself are “Does anybody want this product?”, “Are there a lot of those people?”, and “Can this entrepreneur find them?”. Those three questions keep things simple, but they correspond to the business concepts of product-market fit, market size, and unit economics. In my day-to-day, most of my time is spent on question number one, “Does anybody want it?”. That’s trickier than it seems to evaluate. When I hear a pitch it is pretty helpful if an entrepreneur includes some customer quotes, prospective customer quotes, or expert quotes. During my own post-meeting diligence, I’ll often call a potential customer and describe this new product, but they’ll say “oh I don’t want that”. If I ended the diligence call there, that could be a mistake, so I’ll usually have to explain more and navigate the nuance of a prospective customer’s mind in order to figure out if this would be a good fit. So that’s the trickiest thing I do. I try to figure out if customers might buy the product or service in the future if it existed. Steve Jobs has a famous quote “it’s not the customer’s job to know what they want”, so it’s this delicate process of figuring out what might work if it existed.

Interview: Laura Crabtree, Co-Founder and CEO of Epsilon3, a company building procedure and operations software for spacecraft and complex engineering. Epsilon3 has raised over $18M in funding from Lux Capital, Village Global, MaC Venture Capital, and others.

Laura from her time at SpaceX mission control

Question: What made you decide to participate in an accelerator and Y-Combinator in particular?

Answer: Early on at Epsilon3, we talked a lot about accelerators, mostly while saying to ourselves, "We understand the problem and the industry, but how do you build a business around this problem and how do you give the company the highest chance to succeed going forward?" With that in mind, I read a lot of startup books and newsletters. One of my advisors said to me, "These books are great, but have you ever thought about joining an accelerator?"

There were a couple of different accelerators we were looking at and Y-Combinator was kind of a no-brainer once we got in. When we interviewed and they accepted, I thought to myself, "If I'm going to build a business, I'm not going to have time to go to business school anymore, so this is the best possible way to learn how to build and scale." Y-Combinator really provided help in that path for myself and my two co-founders.

Interview: Dan Berkenstock, Founding CEO of Skybox Imaging. Skybox was acquired by Google for $500M in 2014 and was the first venture capital funded space startup to have a significant exit event, which was a critical inflection point for the space startup world.

Dan giving a Ted Talk in 2013. Source: youtube.com

Question: What were some of the things the company struggled with early on?

Answer: I think where we could have done a better job was communicating and getting buy-in from all of our investors on our strategic plan, what we were doing and why. That is one of the hardest things when you're a 28 or 29-year-old first-time founder and you're trying to take on a big, meaty, capital-intensive problem.

During the course of our Series A, we continued to dive deeper into understanding the nuts and bolts of what it would take to develop a spacecraft constellation and get them launched. During this process, it became clear it would be significantly more expensive and complicated than we had originally anticipated to bring the total capability to market. Part of the reason for that was naiveté on our part because we hadn't gone through and done the work yet to really understand the fine print.

Part of it though was also a difference in backgrounds from our investors. We should have added more buffer into our investor and board's expectations early on in the process. Our team primarily came from aerospace backgrounds, where we knew that there was a dramatic difference in any aerospace program between a back-of-the-envelope, conceptual design and a fully formulated program plan. I think we expected that our investors and board would see things the way we saw them. However, I think for them, it was a more jarring experience. They came primarily from the software industry and other areas that were not as capital intensive and not as subject to significant program ballooning, as you got into the meat of a project.

Interview: Caleb Henry, Senior Analyst at Quilty Analytics and formerly a journalist at Via Satellite and Space News

Caleb Henry. Source: APSAT

Question: There’s debate around the scale of the market demand for LEO constellation services. Do you have thoughts on the size of that demand and whether there’s room for all of these competitors to survive and even thrive?

Answer: We’re seeing a real shift towards a multi-orbit future, what is sometimes referred to as a hybrid architecture. It’s probably not going to be favorable to have service from just one orbit. Even if you have LEO operators like SpaceX and Amazon go forward, I think lots of customers are planning networks around using satellites in LEO, GEO, and even elsewhere like MEO or highly elliptical orbits. That looks like it’s very much going to be the future, people want to combine the advantages of each one. They want the low-latency from LEO, the density of capacity that you can put down from GEO, polar coverage that you can get from LEO or GEO, and the ability to dynamically steer capacity quickly across large geographies that you can get from GEO.

So that’s probably the future that we anticipate. It’s less about who wins and who loses and more about what the broader future of satellite communications looks like. That future is likely not principally defined by a single architecture.

Interview: Tess Hatch, Partner at Bessemer Venture Partners, focuses on frontier technology, specifically the commercialization of space, drones, autonomous vehicles, and agriculture and food technology. Tess is currently a board observer at Rocket Lab and was previously a board director at Spire Global.

Tess Hatch speaking at Tech Crunch Disrupt

Question: What is something that you wish more entrepreneurs knew when they start reaching out to early-stage investors about raising funding?

Answer: It’s a relationship/conversation! I encourage all entrepreneurs to do as much diligence on the investor as the investor does on the company. Call up every CEO/founder the investor has worked with and ask them about working with the investor. Emphasis needs to be on the person, and not just the firm. You are about to partner with this person for the foreseeable future so make sure you two are the right match.

Interview: Steve Isakowitz, CEO of the Aerospace Corporation, a nonprofit corporation established in 1960 that advises and conducts analysis for government, civil, and commercial aerospace customers. Aerospace Corp. has over 4,000 employees and earned over $1.1B in revenue in 2020.

Steve Isakowitz, CEO Aerospace Corporation

Question: What do you think isn’t receiving enough attention in the space world right now?

Answer: From the government side, I think there’s more work to be done on creating a market that’s better understood by the private sector, so the private sector knows where they can invest and can have the confidence that it won’t change for them. The government is trying to figure out how to be a good customer but at the same time knowing that they can depend on the private sector to step up. Something I think the government is always wary of is, will those companies that are hot today be there tomorrow? Can they depend on suppliers to avoid sourcing components from adversaries? Do those suppliers take matters like cybersecurity sufficiently seriously, will the information used within those services be protected? I think the government and industry are starting to work their way through it, but those issues certainly need to be tackled.

That's a wrap! Thanks for being part of the journey so far to 1,000 subscribers and I'm excited to keep offering you even higher quality insight and access into the world of space startups going forward!

And please forward this email to a friend you think would enjoy it!